There is an increase in projects in Dubai leading to an increase in tender and pre-qualification invitations recently.

Mr. Khayyam Abdu, MEP Manager at Trans Emirates Contracting talk to Ventures ONSITE about UAE Construction Industry, plans for the company as well as expectations for 2017. Mr. Khayyam also mentions about how they go about selecting subcontractors and suppliers for their projects.

Mr. Khayyam Abdu, MEP Manager at Trans Emirates Contracting

1. How is 2016 so far when compared to 2015?

Comparing the two years, 2016 is a better year as we witnessed better contract awards and our projects are all progressing on schedule with a few delays, but overall things are going well. Other reasons include we are getting closer to 2020 and also the market sentiment towards low prices is getting accepted as opposed to 2015 when the decreasing oil prices came as a surprise to the industry.

2. What are your expectations for 2017?

For 2017 our expectations are mainly built on two factors - internal and external. The internal factors are the Expo 2020 which is a positive force, the vision of HH Sheikh Mohammed bin Rashid Al Maktoum, vice president and prime minister of the United Arab Emirates, and Emir of Dubai followed by well- defined actions which will always mean growth and attracting investors in a way to resist any crisis.

One of the external factor is the oil price which will mainly have a heavier impact on Abu Dhabi than on Dubai. Another factor is the stability and construction activities in KSA in the wake of reduced oil prices and the resultant economic slowdown since KSA plays an important and influential role in the region. We should wait and see if there is any effects in the Dubai market with the new US president elect Mr. Donald Trump.

3. Do you see an increase (or decrease) in tender or pre-qualification invitations in the last 3 months?

There is an increase in projects in Dubai leading to an increase in tender and pre-qualification invitations recently.

4. Do you see any shift in trends in the industry in the recent past or anything expected to happen in the near future?

The civil construction industry will improve even though there will be no high margin. This is because it is believed that the government will regulate the laws for the real estate companies to revise the prices. It is important because if the prices stay high people will not invest leading to cash flow problems.

5. What are the major challenges your organization faces as a contractor nowadays?

The major challenge I would say is cash flow due to delayed payments. Some clients would intentionally delay the duration of the defect liability period to delay the payment to the contractor.

Skilled manpower is not easy to find and the Indian government has imposed restrictions on recruitment of man power making it harder to hire skilled labor. Contractor pricing is very critical, the client being meticulous and very detailed oriented wanting the project 100% deliverable as per the specifications as opposed to previously when they would wave overstated part of specifications.

6. Do you have any shift in strategy which you can share with us for the near future – expansion, diversification etc.?

We were considering opening a full MEP division instead of outsourcing but then we faced scarcity of resources and aggressive price competition. Many of the current MEP contracting companies that were established around 2005 period when the economy was booming are now trying to survive. We see some barriers to entry as of now. In any case, we do not have any shift in strategy as of now. We may look into some options when the economy is better.

7. Since you are the MEP Manager – do you work with the same few MEP Contractors always or you are open to new companies if you are happy with their technical capabilities and financial proposal? Similarly, for suppliers and subcontractors – do you see new companies and products often?

We prefer to work with the companies we had worked with before but at the same time it is a volatile market and sometimes the MEP contractors would deliver differently if the team is different. The map of MEP contractors has changed hence depending on their pricing and the capabilities, we are open to engage with new companies. We will go with those technically qualified and capable to deliver with lower prices.